Structural reforms and banking efficiency in the new EU States

This paper opts for the stochastic frontier methodology to investigate the impact of structural reforms on profit efficiency in the banking industry of four new European Union Member States over the period 1999–2003. Our findings suggest that reforms in the banking market are of vital importance for profitability, as they assert a positive impact on profit efficiency, whereas reforms in the non-bank financial sector appear to hinder profit efficiency. [Copyright &y& Elsevier]